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Increasing Traffic Congestion May Point to Strengthening Economy

If traffic congestion is a good indicator of the health of the economy, then some economists’ recent concerns about hitting a so-called “soft patch” during the current quarter may be unfounded.

A new Gridlock Index from the traffic information provider Inrix shows overall levels of U.S. traffic jumped by more than 9% during April compared to a year ago, the second largest year-over-year increase recorded on record.

"The latest IGI shows the U.S. economy is getting back to business," says Bryan Mistele, CEO of Inrix. "However, the pattern we're seeing in our data shows that the economies in some regions, like the Midwest, are accelerating while others are stuck in a lower gear."

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Overall U.S. gridlock levels grew by 9.4% from April 2012 to April 2013 to reach a composite IGI score of 6.9. This means the average trip took drivers in the 100 most populated metro areas nearly 7% longer because of increased traffic congestion, a side-effect of better economic times says the company.

However, a regional view showed that year-over-year traffic declined in metro areas like Baton Rouge, down 38%; Oklahoma City, down 32%: Louisville, down 26%; and New Orleans, down 21%, consistent with a pattern for the South that emerged late last year.

The economies in the nation's other regions fared much better, with traffic growing in northeastern metro areas by 10% and in western metro areas by 13%. With 14% year-over-year growth, metro areas in the Midwest showed the strongest regional performance.

The mixed performance seen in the new report is reflected in other recent economic news. Data through March 2013 from the S&P/Case-Shiller Home Price Indices showed the highest increase in U.S. house prices since 2007, while the Conference Board's gauge of economic sentiment hit a five-year high in May. April's Fed Beige Book, however, showed economic observers were more cautious in southern districts like Atlanta and Richmond, as they reported mixed sales activity, lower expectations for manufacturing activity and hiring restrained by uncertainty over fiscal and healthcare policies.

Recently some economists have said they expect the U.S. economic growth to slow in the current quarter compared to the 2.4 annual rate in the first quarter due to declines in some economic indicators.